Bond Market Update

That's a Wrap

• U.S. Treasuries saw some follow-through buying interest overnight that pushed yields modestly lower across the board. A weaker-than-expected December Manufacturing PMI report out of China provided an excuse for buyers along with a safe-haven push in front of the mid-week closure for the New Year's holiday. The buying efforts dissipated during the cash session, however, and renewed selling interest drove up yields for the belly and long end of the curve in a steepening trade that was emblematic of the 2024 bias. The U.S. Dollar Index jumped 0.3% (and 7.1% for the year) to 108.49, benefiting largely at the expense of a weaker euro. Happy New Year!
• Yield Check:
  • 2-yr: -1 bp to 4.24% (-1 bp for the year)
  • 3-yr: -1 bp to 4.27% (+26 bps for the year)
  • 5-yr: +1 bp to 4.38% (+53 bps for the year)
  • 10-yr: +2 bps to 4.57% (+69 bps for the year)
  • 30-yr: +2 bps to 4.78% (+75 bps for the year)

• News:
  • Chinese President Xi says GDP growth will be around 5% next year, according to Bloomberg
  • Chinese hackers stole documents from Treasury Department, according to Reuters
  • China wants its own chips in its EVs, according to The Wall Street Journal
  • China's December manufacturing PMI report for Decembe checked in at 50.1, just barely above the expansion threshold of 50.0 but down from 50.3 in November
  • Germany, Italy, and Switzerland were closed for the New Year's holiday. France, the UK, and Spain have early closes.
  • Japan and South Korea closed for New Year's holiday. Hong Kong had an early close.
  • South Korea's December CPI 0.4% m/m (expected 0.2%; last -0.3%) and 1.9% yr/yr (expected 1.7%; last 1.5%)
• Today's data:
  • The October FHFA Housing Price Index increased 0.4% month-over-month following a 0.7% increase in September. It was up 4.5% year-over-year, as it was in September.
  • The October S&P Case-Shiller Home Price Index Composite - 20 increased 0.3% month-over-month following a 0.2% increase in September. It was up 4.2% year-over-year (Briefing.com consensus 4.2%) following a 4.6% increase in September.
• Commodities:
  • WTI crude: +1.1% to $71.85/bbl
  • Gold: +0.9% to $2641.10/ozt
  • Copper: -2.0% to $4.02/lb
• Currencies:
  • EUR/USD: -0.5% to 1.0353
  • GBP/USD: -0.3% to 1.2506
  • USD/CNH: +0.3% to 7.3351
  • USD/JPY: +0.3% to 157.29
• The Day Ahead:
  • Market closed Wednesday for New Year's Day
  • 08:30 ET Thursday: Initial Jobless Claims (Briefing.com consensus 224K; prior 219K) and Continuing Jobless Claims (prior 1910K)
  • 09:45 ET Thursday: December S&P Global US Manufacturing PMI - Final (prior 49.7)
  • 10:00 ET Thursday: November Construction Spending (Briefing.com consensus 0.2%; prior 0.4%)
  • 10:30 ET Thursday: EIA Crude Oil Inventories (prior -4.237M)